Final regulations regarding Roth catch-up contribution rules were released on September 15, 2025, and will take effect in 2027. In the interim, plans are expected to follow a reasonable, good faith interpretation of Section 603 for the year 2026. This document provides best practices, along with designated roles and responsibilities, to ensure compliance with the Roth catch-up contribution requirements, with the goal of streamlining complex processes and fostering consistency across the industry.
The IRS released Final Regulations on September 15, 2025, concerning mandatory Roth catch-up contributions for participants with higher FICA wages. These regulations maintain the "Deemed Roth Catch-up Election" rule from earlier proposed regulations. Under this rule, plans can automatically designate catch-up contributions as Roth for affected participants, provided they are offered a chance to opt out. To implement this option, plans must be amended accordingly.
Researchers, including David Laibson from Harvard University, studied the impact of default savings rates on retirement outcomes by examining employees at a U.K. firm with a 12% default rate. They found that while 75% of employees opted out, 25% remained at the 12% savings rate, notably including many lower-income employees. Laibson suggests that these findings indicate the effectiveness of high default savings rates but also highlight the need for a more individualized approach to retirement plans.
Managed accounts are investment portfolios overseen by professional managers who tailor asset allocation based on various financial factors and retirement age, going beyond the approach used by target-date funds. Incorporating managed accounts into retirement plans can offer personalized investment advice similar to that of traditional financial advisors, but in a more scalable and cost-effective way. They are particularly beneficial for participant demographics with higher balance accounts and older employees facing complex financial situations. However, there are some drawbacks to managed accounts that should be considered.
Nearly 57 million American workers -- almost half of the private sector -- lack retirement benefits at their jobs. In response, 17 states have implemented automated individual retirement accounts to help close this savings gap. However, unlike 401k plans, auto-IRAs do not allow for employer contributions, which may reduce employee participation. A new federal initiative, the Saver's Match, set to launch in 2027, could change this by providing incentives for eligible workers, potentially increasing participation in state auto-IRA programs and encouraging higher voluntary contributions, thereby boosting overall savings.
An increasing number of employees are considering retiring at age 70--or not retiring at all. This trend may affect your workplace dynamics. So, what are the reasons behind this decision? Many are juggling ambitious savings goals, managing debt and financial pressures, facing healthcare uncertainties, and feeling anxious about stepping away from work. The positive aspect is that plan sponsors can assist these workers in feeling better prepared for retirement.
Source: Pensionplanspecialists.com, September 2025
As financial advisors adapt to the evolving investment landscape, the challenge of incorporating emerging assets like cryptocurrency into retirement plans becomes significant. While cryptocurrencies present growth opportunities, they also carry unique risks that can affect the financial security of participants. To navigate this complexity, fiduciary analysts can align cryptocurrency investment considerations with best practices in fiduciary investment management.
Reps. Seth Magaziner and Ron Estes have introduced the Unclaimed Retirement Rescue Plan, a bill that would authorize the DOL to regulate the transfer of unclaimed retirement distributions to state unclaimed property programs. If passed, the bill would allow, but not require, ERISA fiduciaries to transfer unclaimed balances after making efforts to contact the participant. Additionally, fiduciaries would be required to report the transfers to the DOL for inclusion in a Lost and Found database.
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Collected Wisdom™
Our researchers look for what they think are some of the better resources available to assist you in administering your plan or helping your clients. We group these resources in our COLLECTED WISDOM™ topics to make it easy for you to locate the information you need. Each item in a category contains a summary and date of when it was placed in the group.
We also maintain some older material in these collections for perspective and context.
